Lancaster Colony Reports Third Quarter Sales and Earnings
Summary
-
Consolidated net sales increased 1.4% to a third quarter record
$471.4 million versus$464.9 million last year. Retail net sales improved 0.3% to$248.1 million while Foodservice net sales grew 2.6% to$223.4 million . -
Consolidated gross profit increased
$10.3 million , or 10.9%, to$104.5 million driven by favorability in our pricing net of commodity costs, or PNOC, our ongoing cost savings initiatives, and volume growth. Consolidated gross profit was unfavorably impacted by a$2.6 million inventory write-down resulting from the decision to exit our perimeter-of-the-store bakery product lines, specifically our Flatout® and Angelic Bakehouse® brands, which were not significant contributors to our overall financial results. -
Consolidated operating income increased
$5.7 million to$35.1 million due to solid growth in the underlying performance of the business partially offset by the impacts of our decision to exit our perimeter-of-the-store bakery product lines which resulted in costs totaling$14.7 million . The exit costs include$12.1 million in restructuring and impairment charges and the$2.6 million inventory write-down. Of the$12.1 million in restructuring and impairment charges, noncash impairment charges for fixed assets and intangible assets accounted for$10.7 million . -
Net income was
$1.03 per diluted share versus$0.89 per diluted share last year. The exit costs reduced current-year net income by$0.41 per diluted share.
CEO
“Our reported gross profit margin improved 190 basis points versus last year to 22.2%, which reflects favorable pricing net of commodity costs, or PNOC, following two years of unprecedented inflation, in addition to the positive impacts of our cost savings initiatives and volume growth. The
“Following a review of our product portfolio, we made the difficult decision to exit our perimeter-of-the-store bakery product lines, specifically our Flatout and Angelic Bakehouse brands, which were not significant contributors to our overall financial results. Both brands were typically sold in the deli section of the grocery store with product offerings that included Flatout flatbread wraps and pizza crusts and Angelic Bakehouse sprouted grain bread loaves and wraps. Unfortunately, due to a lack of scale and direct-to-store distribution capabilities, we were not able to achieve the desired operational or financial performance for these product lines. Production at both the Flatout and Angelic Bakehouse facilities ended on
“Looking ahead to our fiscal fourth quarter, we anticipate Retail sales will continue to benefit from our licensing program, including incremental growth from the recent additions of
Third Quarter Results
Consolidated net sales increased 1.4% to a third quarter record
Consolidated gross profit increased
SG&A expenses declined
The restructuring and impairment charges of
Consolidated operating income increased
Net income increased
Fiscal Year-to-Date Results
For the nine months ended
Conference Call on the Web
The company’s third quarter conference call is scheduled for this morning,
About the Company
Forward-Looking Statements
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This news release contains various “forward-looking statements” within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words “anticipate,” “estimate,” “project,” “believe,” “intend,” “plan,” “expect,” “hope” or similar words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments; and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors, many of which are beyond our control, which could cause our actual results to differ materially from those expressed in the forward-looking statements. Some of the key factors that could cause actual results to differ materially from those expressed in the forward-looking statements include:
- efficiencies in plant operations and our overall supply chain network;
- price and product competition;
- the impact of customer store brands on our branded retail volumes;
- adequate supply of labor for our manufacturing facilities;
- stability of labor relations;
- adverse changes in freight, energy or other costs of producing, distributing or transporting our products;
- the reaction of customers or consumers to pricing actions we take to offset inflationary costs;
- inflationary pressures resulting in higher input costs;
- fluctuations in the cost and availability of ingredients and packaging;
- dependence on contract manufacturers, distributors and freight transporters, including their operational capacity and financial strength in continuing to support our business;
- capacity constraints that may affect our ability to meet demand or may increase our costs;
- the impact of any regulatory matters affecting our food business, including any additional requirements imposed by the FDA or any state or local government;
- dependence on key personnel and changes in key personnel;
- cyber-security incidents, information technology disruptions, and data breaches;
- the potential for loss of larger programs or key customer relationships;
- failure to maintain or renew license agreements;
-
geopolitical events, such as Russia’s invasion of
Ukraine , that could create unforeseen business disruptions and impact the cost or availability of raw materials and energy; - significant shifts in consumer demand and disruptions to our employees, communities, customers, supply chains, production planning, operations, and production processes resulting from the impacts of epidemics, pandemics or similar widespread public health concerns and disease outbreaks;
- changes in demand for our products, which may result from changes in consumer behavior or loss of brand reputation or customer goodwill;
- the possible occurrence of product recalls or other defective or mislabeled product costs;
- the success and cost of new product development efforts;
- the lack of market acceptance of new products;
- the extent to which good-fitting business acquisitions are identified, acceptably integrated, and achieve operational and financial performance objectives;
- the effect of consolidation of customers within key market channels;
- maintenance of competitive position with respect to other manufacturers;
- the outcome of any litigation or arbitration;
- changes in estimates in critical accounting judgments;
- the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs; and
-
risks related to other factors described under “Risk Factors” in other reports and statements filed by us with the
Securities and Exchange Commission , including without limitation our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (available at www.sec.gov).
Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements, except as required by law. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on statements that are based on current expectations.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
|||||||||||
(In thousands except per-share amounts) |
|||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
Net sales |
$ |
471,446 |
|
$ |
464,935 |
|
$ |
1,418,934 |
|
$ |
1,367,866 |
Cost of sales |
|
366,952 |
|
|
370,698 |
|
|
1,084,250 |
|
|
1,072,472 |
Gross profit |
|
104,494 |
|
|
94,237 |
|
|
334,684 |
|
|
295,394 |
Selling, general & administrative expenses |
|
57,211 |
|
|
64,829 |
|
|
164,872 |
|
|
165,361 |
Restructuring and impairment charges |
|
12,137 |
|
|
— |
|
|
12,137 |
|
|
— |
Operating income |
|
35,146 |
|
|
29,408 |
|
|
157,675 |
|
|
130,033 |
Other, net |
|
1,748 |
|
|
607 |
|
|
4,030 |
|
|
815 |
Income before income taxes |
|
36,894 |
|
|
30,015 |
|
|
161,705 |
|
|
130,848 |
Taxes based on income |
|
8,544 |
|
|
5,460 |
|
|
37,920 |
|
|
28,728 |
Net income |
$ |
28,350 |
|
$ |
24,555 |
|
$ |
123,785 |
|
$ |
102,120 |
|
|
|
|
|
|
|
|
||||
Net income per common share: (a) |
|
|
|
|
|
|
|
||||
Basic and diluted |
$ |
1.03 |
|
$ |
0.89 |
|
$ |
4.50 |
|
$ |
3.71 |
|
|
|
|
|
|
|
|
||||
Cash dividends per common share |
$ |
0.90 |
|
$ |
0.85 |
|
$ |
2.65 |
|
$ |
2.50 |
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
||||
Basic |
|
27,436 |
|
|
27,465 |
|
|
27,437 |
|
|
27,462 |
Diluted |
|
27,451 |
|
|
27,487 |
|
|
27,455 |
|
|
27,479 |
(a) |
Based on the weighted average number of shares outstanding during each period. |
|
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BUSINESS SEGMENT INFORMATION (Unaudited) |
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(In thousands) |
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
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Retail |
$ |
248,054 |
|
|
$ |
247,208 |
|
|
$ |
754,230 |
|
|
$ |
729,187 |
|
Foodservice |
|
223,392 |
|
|
|
217,727 |
|
|
|
664,704 |
|
|
|
638,679 |
|
Total |
$ |
471,446 |
|
|
$ |
464,935 |
|
|
$ |
1,418,934 |
|
|
$ |
1,367,866 |
|
|
|
|
|
|
|
|
|
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OPERATING INCOME |
|
|
|
|
|
|
|
||||||||
Retail |
$ |
47,313 |
|
|
$ |
36,943 |
|
|
$ |
159,958 |
|
|
$ |
129,195 |
|
Foodservice |
|
24,334 |
|
|
|
22,405 |
|
|
|
78,112 |
|
|
|
81,030 |
|
Nonallocated Restructuring and Impairment Charges |
|
(12,137 |
) |
|
|
— |
|
|
|
(12,137 |
) |
|
|
— |
|
Corporate Expenses |
|
(24,364 |
) |
|
|
(29,940 |
) |
|
|
(68,258 |
) |
|
|
(80,192 |
) |
Total Operating Income |
$ |
35,146 |
|
|
$ |
29,408 |
|
|
$ |
157,675 |
|
|
$ |
130,033 |
|
|
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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(In thousands) |
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|
|
|
|
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ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and equivalents |
$ |
164,756 |
|
$ |
88,473 |
Receivables |
|
102,637 |
|
|
114,967 |
Inventories |
|
161,088 |
|
|
158,265 |
Other current assets |
|
12,250 |
|
|
12,758 |
Total current assets |
|
440,731 |
|
|
374,463 |
Net property, plant and equipment |
|
483,662 |
|
|
482,206 |
Other assets |
|
247,619 |
|
|
256,325 |
Total assets |
$ |
1,172,012 |
|
$ |
1,112,994 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable |
$ |
120,528 |
|
$ |
111,758 |
Accrued liabilities |
|
69,258 |
|
|
56,994 |
Total current liabilities |
|
189,786 |
|
|
168,752 |
Noncurrent liabilities and deferred income taxes |
|
69,374 |
|
|
81,975 |
Shareholders’ equity |
|
912,852 |
|
|
862,267 |
Total liabilities and shareholders’ equity |
$ |
1,172,012 |
|
$ |
1,112,994 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240501127637/en/
Dale N. Ganobsik
Vice President, Corporate Finance and Investor Relations
Phone: 614/224-7141
Email: ir@lancastercolony.com
Source: